Volvo Confident In New S60 Launch Despite Market Decline

If you were about to launch a new vehicle into a segment that is suffering a double-digit decline in overall sales, you might be more than a little nervous. And if that new vehicle was the first product to be manufactured in an all-new $1.1 billion plant, you might be shaking in your cordovans. So why was Anders Gustafsson, Senior Vice President of the Americas and President & CEO Volvo Cars USA, smiling so sardonically as he helped introduce the 2019 Volvo S60 luxury sedan and V60 station wagon to a gathering of auto journalists in Santa Monica, California?

Certainly, being charged with selling sedans in a market that has pivoted to crossovers is a daunting task. To add another degree of difficulty, the brands Volvo would like to compete with more effectively include Mercedes-Benz, BMW and Audi, not exactly pushovers.

But Gustafsson is smiling his Cheshire-cat smile because the business unit he runs — Volvo Cars USA — is enjoying a heady run of success. According to auto sales tracker GoodCarBadCar.net, Volvo brand sales are up 23% year-to-date through September in an overall market that was down substantially. The key: strong crossover sales of the XC90, XC60 and the recently introduced XC40. The latter is virtually “sold out,” Gustafsson said.

“With an increase of 30% [in overall U.S. Volvo sales for the model year] the boss leaves me alone right now; he doesn’t chase me so much,” Gustafsson said.

New Volvo S60 sedan set to compete with BMW 3 Series and Mercedes-Benz C-Class.Volvo

Another reason for confidence — the new Volvo S60 is a much better vehicle than the car it is replacing. It should give the brand a strong leg up in competing in what the Volvo executive admits freely is “an extremely competitive segment.”

The S60 will be available with three technically fascinating powertrains — a turbocharged 2.0-liter four-cylinder, a turbocharged and supercharged 2.0-liter four-cylinder and a turbocharged and supercharged 2.0-liter four cylinder with plug-in hybrid capabilities. The last is the most potent of the powertrains. In its most explosive form it delivers 415 combined horsepower, not your grandmother’s Prius, that’s sure.

Gustafsson also has a spring in his step because he believes the recent sales success of Volvo Cars USA is not built on shifting sands.

“We are growing over 30% and it is extremely healthy growth based on we are quite small on lease compared to some of our competitors,” he said. “We don’t do stupid things in U.S. So our growth is very, very healthy. I am extremely proud of that process.”

The strong success of the XC40 compact SUV seemingly took even Volvo by surprise.

“Maybe we were a little bit too humble when we calculated the segment share that we could deliver with our brand,” Gustafsson said. “And after we launched Care by Volvo at the LA Auto show we were sold out in three months, and that was not in our plan.”

Care by Volvo is the brand’s innovative vehicle subscription program, which launched with a bang in conjunction with the XC40 introduction in the United States. Subscription customers can consolidate virtually all their monthly transportation costs with the exception of gasoline and oil in a single monthly payment. Service, maintenance and, importantly, insurance are covered in the payment. With a 24-month commitment, customers have the option of getting into a new vehicle after 12 months. Prior to its official introduction, the S60 sedan has been added to the Care by Volvo offerings.

“I’m not nervous, but we are going to see if it’s the car that drives Care by Volvo or if it is the customer demands,” Gustafsson said. “From early indications I think this [the subscription model] is something that can change the industry. It will take time but from Volvo’s point of view we’ve been able to attract customers we’ve never been able to attract before.”

He said “95% of customers related to Care by Volvo are really new to the Volvo family.”

Volvo S60 sedans, built in the new U.S. plant outside Charleston, S.C., will begin arriving in dealerships over the course of the next few weeks. Volvo is currently enabling subscriptions to the S60 via Care by Volvo on its consumer website and smartphone app. The major launch of the sedan, accompanied by heavy advertising, will take place in the first quarter of next year. Its progress will determine if Gustafsson maintains his grin in 2019.

I have been helping consumers understand and better deal with the global car business for decades. Previously, I served as Editor of Motor Trend magazine, Director of Publications at J.D. Power and Executive Editorial Director of Kelley Blue Book, and I have watched this bus...